Tuesday, June 06, 2006

Pondering Renters Insurance

Oh, no. Summer means hurricanes, brush fires, tornadoes and other seasonal patterns in different parts of the country. (Every region has its issues.)

On my balcony, the view of the Atlantic Ocean comes with a price: I fret about the safety of my family and belongings during Hurricane Season.....

Of course, my landlord has property insurance. But I can't be lured into a false sense of security. The landlord’s policy provides coverage for the actually building, but such policies typically exclude coverage for the personal belongings of tenants. Bottom line: It's time to cover my assets! Surprisingly, rental insurance policies are affordable. ( I got a quote from Geico for less than $300 a year.)

Coverage and costs vary from company to company. I plan to contact local insurance agents to get policy information and prices. I can also tap into Internet resources by applying the term “renters insurance” to popular search engines.

Here's my own Q & A of key issues for those of us who live in apartments and want protection for our possessions.

What types of events are covered by renters insurance?

Lighting, fire, theft/vandalism, water-damage from home plumbing, riots, electrical surges, falling objects and other accidents

What about flood coverage?

Ah! That’s the $64,000 question. Depending on the company, residents may need to purchase an additional policy or “rider” for flood coverage. And for hurricane coverage, there are often separate policies/riders for wind storm coverage.

What other “issues” should you watch out for when purchasing rental insurance?

Read the fine print. Many policies offer coverage for either “actual cash value” (ACV) or “replacement cost value” (RCV). Take the second option whenever possible. That’s because ACV coverage offers a settlement to cover the only value of your property at the time of the fire, storm or theft.

For example, your computer system may have cost $1,200 two years ago, but it may only be worth $200 under ACV calculations. But RCV coverage enables you to collect the sum of money that it would cost (TODAY!!!) to replace your computer system due to damage, theft or loss from your home. You get a lot more coverage for your money under RCV policies.

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